Demand

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Demand in economics refers to the amount of something that consumers or investors will want to buy at a given price - in general, demand goes up if price goes down. Along with supply, demand is considered the key factor - though not the only one - that determines how the price of a good or service is set.

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The demand curve is a downward slope illustrating the relationship between demand and price, since as price goes down demand is assumed to to rise in a linear fashion, and vice versa. Higher prices tend to reduce demand because as prices rise consumers face an opportunity cost because they can no longer afford other things they value. Supply impacts demand if there is not enough of something for the number of people wanting to purchase it, thus pushing up the price, while setting the price of something too low will push up demand.[1]

Demand-side economics, also called Keynesian economics, holds that governments need to take an active role in deciding monetary and fiscal policy to ensure economic stability an prosperity.[2] Demand-side economic policies include adjusting taxation rates, government spending or market regulation to achieve economic goals.

References

  1. Economics Basics: Demand and Supply. Investopedia - Forbes Digital.
  2. Keynesian Economics. FinancialDictionary.com.